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Friday, October 05, 2007

One of the most active venture capital investors in health care companies—both in number of investments and opportunities for exits—isn’t a venture capital firm at all. It’s Ascension Health Ventures, and the group is about to get more active.Founded in 2001, Ascension Health Ventures operated as an experiment of sorts, a venture capital group backed with $125 million from the largest not-for-profit health care system in the U.S.

Unlike other hospital-affiliated investment groups, Ascension Health Ventures didn’t look inside its own hospitals’ walls to find investments. Rather, it swam with other VCs, identifying both early and late-stage health care companies with products that might someday be used by its own hospitals and doctors.

After managing a successful debut fund, the St. Louis-based group announced today that it secured a second fund that counts two other hospital systems as limited partners. Catholic Health Initiatives and Catholic Health East agreed to participate in CHV II, L.P., a $200 million fund that will be invested along the same parameters as Ascension’s first $125 million fund.

Ascension Health remains the largest investor in the fund, which will be managed by Ascension Health Ventures II, LLC, the general partner of the fund. Each of the systems will have a representative on the six-person management committee that’s required to approve all new investments. The group also invests directly in venture funds. With its last fund it took part in funds raised by CB Health Ventures, Essex Woodlands Health Ventures and Sanderling Ventures. Now, with its new fund, it already made a commitment to the recent fund raised by SV Life Sciences.

Ascension’s portfolio company count from its first fund is at 19, including 10 medical device companies. Three of those companies staged strong IPOs—Emageon Inc., Stereotaxis Inc. and TomoTherapy Inc.—while a fourth, Confluent Surgical Inc., produced an exit through an acquisition by Covidien Ltd.

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